MGM to reshuffle debt through $1 billion in senior notes
The gambling company doubles its original offer
MGM Resorts said in a filing with NASDAQ yesterday that it wants to offer $1 billion in senior notes in an effort to rearrange its loans. The amount is twice the amount previously presented and would include 5.5% senior notes that would become due in 2027. The fact that it needs to shuffle things up that much is unsettling.
The proceeds from the offering would go toward the repurchase of up to $1 billion through cash tender offers. Any proceeds after expenses are paid would be used for “general corporate purposes,” including “refinancing existing indebtedness, paying dividends on our common stock or repurchasing our common stock in accordance with our share repurchase program.”
Some of the net proceeds could also make their way to “short-term interest-bearing accounts, securities or similar investments.” The closing date for the offer is expected to be April 10.
The shuffling game comes only three months after MGM borrowed more money. Those loans were earmarked to refinance other debts, cover general corporate expenses (another way of saying bonuses for high-ranking executives) and to fund other transactions the company has recently announced.
MGM is one of several U.S.-based casino operators vying for a license to operate an integrated resort (IR) in Japan. The country legalized, under a long list of conditions, gambling last year and MGM has stated that it could spend as much as $10 billion on a new resort. Taking on more debt to pay off debt doesn’t seem to be a smart way to get things going in Japan.